Siwek was in an auto accident while using Erickson’s vehicle in the summer of 2003. Erickson was insured by American Access Casualty Company, with Siweck on the policy as a co-operator. They notified the state of Illinois of the accident and named American as their insurer, but American told the state in September of that year that the policy had been canceled in May of that year. This led IDOT to certify both Siweck and Erickson as drivers who had been involved in an accident without auto insurance. At a hearing, Erickson successfully defended his license. Siweck testified at the same hearing that she had no notice of cancellation and presented paperwork showing that American had issued her a new declaration of coverage on the day after the supposed cancellation.

The state suspended Siweck’s driver’s license nonetheless. Siweck and Erickson sued for administrative review of the decision to suspend Siweck’s license and declaratory judgments against American. They sought a declaration that their policy was improperly canceled, meaning Siweck was insured at the time of the accident.

In response, American argued in court papers that the policy was canceled for failure to pay. Erickson bought the insurance policy through a broker and financed it through Fullerton Finance Company, which would make an up-front payment to American and accept monthly payments from Erickson. Fullerton notified American in May of 2003 that plaintiffs had failed to pay, so American canceled the policy. Because the premium had not been paid, American argued, it had no duty to insure Siweck. However, the plaintiffs responded, Fullerton had made the payment, they had no notice of the cancellation and Fullerton was not authorized to cancel the policy. Furthermore, American had issued them a declaration of coverage on the very next day after the purported cancellation.

The trial court ultimately dismissed American’s defenses with prejudice and granted summary judgment to the plaintiffs. After a settlement offer from American, the plaintiffs also dismissed their claims against the state of Illinois. They then moved for attorney fees, costs and sanctions under section 155 of the Insurance Code, which provides those payments when an insurer has been “vexatious and unreasonable.” These were granted. American appealed that decision along with the summary judgment and dismissal of its affirmative defenses.

The First District started by considering American’s appeals of the summary judgment for plaintiffs and the dismissal of its own alternative defenses. Regardless of the merits of those arguments, the court wrote, they were waived on appeal because American did not fight them at trial. It did not oppose plaintiffs’ motion for summary judgment, the court wrote, and in fact expressly said it would not in its settlement letter. However, if the court did consider those arguments, it asserted that would still affirm the trial court’s ruling. American had not effectively countered the plaintiffs’ claims about the declaration of coverage issued the day after its purported cancellation of their policy, the court wrote.

Finally, the court considered American’s appeal of the order for attorney fees and sanctions. American argued that the motion was not timely, that it had never denied liability coverage since no claim was filed and that plaintiffs had not paid the premium. Again, the appeals court disagreed. The relevant section of the Illinois Insurance Code states that a court may award attorney fees and sanctions when it believes an insurer’s delays were vexatious and unreasonable. One factor that tests this is whether the insured was forced to sue to recover, the court wrote — as was the case here. Thus, it declined to find that the trial court abused its discretion in the matter and affirmed the court’s decision as to attorney fees and sanctions as well.